Bill Clinton Says Don’t Fix Deficit Amid ‘Busted’ Economy

June 30 (Bloomberg) -- Former President Bill Clinton said
U.S. policymakers shouldn’t slash spending or boost taxes until
the economy has more time to mend.

“I don’t like the deficit,” Clinton told Bloomberg
Television’s Al Hunt in an interview today in Chicago. “But you
can’t balance the budget in a busted economy.”

Clinton said he would suggest waiting two years before
implementing the kind of deficit-reduction proposals envisioned
by President Barack Obama’s fiscal commission.

“I think it’s crazy for us to be talking about doing this
right now,” he said. “I don’t think it’s healthy to have big
tax cuts or big tax increases or big spending cuts right now. We
need to put America back to work first.”

Politics has distorted the facts of the nation’s debt
ceiling during the debate between Obama and congressional
Republicans, Clinton said.

“When you vote to raise the debt ceiling, you’re not
legitimizing further deficits,” he said. “You’re voting to pay
what you owe for what has already been done.”

Obama and congressional leaders remain at odds over how to
reduce the deficit and clear the way for an agreement to raise
the nation’s borrowing limit, currently capped at $14.3
trillion. The Treasury Department has said it has until Aug. 2
before its ability to pay U.S. debt obligations runs out.

“The Republicans, they think they’ve got the president and
the Democrats over a barrel,” Clinton said. Whether they
actually do, he said, “depends on whether we stand up to
them.”

‘Painful Cuts’

At a White House news conference yesterday, Obama urged
Republicans to set aside their rejection of tax increases as
part of a deficit-reduction plan. Democrats are willing to
accept some “painful cuts” to favored programs, and
Republicans must concede that some taxes may have to be raised,
he said.

In December, the Obama commission chaired by onetime
Clinton White House Chief of Staff Erskine Bowles and former
Senator Alan Simpson, a Wyoming Republican, produced a deficit
plan that included higher tax revenue. It recommended devoting
$80 billion in new revenue to shrink the deficit in 2015 and
$180 billion in 2020 by curbing tax expenditures.

It’s the Economy

Clinton noted that the British government has pushed
austerity measures in the face of a sputtering economy.

“If it doesn’t work -- and so far it’s not -- there’s a
real chance that their deficit will actually go up because
revenues will go down even more than spending will be cut,” he
said.

Debating whether to raise the U.S. debt ceiling is less
important than agreeing on a long-term plan to lower the
deficit, Clinton said.

“Then, we could go back and focus everybody’s attention on
how to grow this economy,” he said. “Unless we do that, we’re
never going to balance the budget.”

While Clinton expressed support for proposals that would
cut tax rates to encourage companies to repatriate profits from
overseas, he cautioned what happened the last time that was
done, under President George W. Bush.

“Almost none of that money was reinvested in the American
economy,” Clinton said.

The former president was in Chicago for his two-day Clinton
Global Initiative conference. More than 750 business and
government leaders are attending the conference at a Chicago
hotel, along with Treasury Secretary Timothy Geithner,
Agriculture Secretary Tom Vilsack and Energy Secretary Steven
Chu.

Clinton Initiative

The conference marks the first time Clinton has held such a
gathering focused solely on the U.S. He established the Clinton
Global Initiative in 2005, and the group says that over the
years it has received investment commitments worth $63 billion
that already have helped 300 million people in 180 countries.

In the interview, Clinton laughed and dismissed as
“clever” politics the recent compliments of Mitch McConnell,
the Senate Republican leader, who said he was nostalgic for the
Clinton administration’s pro-trade and pro-business approach.

“Bill Clinton’s got a leg in the grave -- it’s safe to say
something nice about him,” the former president said. “I’ve
become kind of a convenient foil. But I get tickled. All these
guys that used to say I was the worst thing since Attila the
Hun, all of a sudden now they want to build statues to me.”